ESG Sukuk
Pronunciation: E-S-G soo-KOOK
Sukuk whose proceeds are earmarked for environmental, social, or sustainability-linked projects.
Definition
Sukuk issued under a Shariah-compliant structure where the proceeds are ring-fenced for environmental, social, or sustainability-linked projects — commonly bundled as 'green sukuk' (renewable energy, clean transport), 'social sukuk' (affordable housing, healthcare), or 'sustainability sukuk' (mixed). The ESG framework overlays well on Islamic finance principles because both prohibit harmful industries and emphasize maqasid al-Shariah (objectives that benefit society). Malaysia issued the world's first green sukuk in 2017 (Tadau Energy); Indonesia followed with the first sovereign green sukuk in 2018.
Saudi Arabia and the UAE are now the largest sovereign green-sukuk issuers. For U.S. Muslim investors, ESG sukuk are accessible primarily through emerging-market and global sukuk ETFs that include sustainability-screened tranches.
Related Terms
Sukukصكوك
Islamic investment certificates — structured as ownership shares in assets rather than debt obligations.
Halal Screening
The process of evaluating stocks and investments for compliance with Islamic principles.
Ijaraإجارة
A lease or rental agreement — one of the three main halal home financing structures used in the U.S.
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ESG Sukuk — Sukuk whose proceeds are earmarked for environmental, social, or sustainability-linked projects. Sukuk issued under a Shariah-compliant structure where the proceeds are ring-fenced for environmental, social, or sustainability-linked projects — commonly bundled as 'green sukuk' (renewable energy, clean transport), 'social sukuk' (affordable housing, healthcare), or 'sustainability sukuk' (mixed). The ESG framework overlays well on Islamic finance principles because both prohibit harmful industries and emphasize maqasid al-Shariah (objectives that benefit society).
- Sukuk whose proceeds are earmarked for environmental, social, or sustainability-linked projects.
- Category: Investment
- Related: Sukuk, Halal Screening, Ijara
- Compare related Shariah-compliant products on HalalWallet
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Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-05-01
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